Ligand binding to growth factor, cytokine, and cell adhesion receptors alters the dynamic balance of tyrosine phosphorylation and sets in motion a cascade of events that ultimately results in a change in the cellular physiology. Protein tyrosine phosphatases are central to this regulation and are relatively unexplored targets for modulating cellular responses by pharmacological reagents. This application focuses on an intracellular protein tyrosine phosphatase, SHP-l, an SH2-containing cytosolic protein. Mice deficient in SHP-I suffer from abnormalities in hematopoiesis and leukocyte activation. The phenotype of these mice is consistent with the idea that SHP- l functions as a negative regulator of many different types of immunoreceptors and demonstrates that a failure in negative regulation will cause severe pathological consequences. Analysis of the regulation and function of SHP-1 will provide further insight into the regulation of cellular growth and differentiation. There are three Specific Aims. In Specific Aim l genetic epistasis experiments are proposed to further define the role of SHP-l in regulating leukocyte differentiation and activation. Mice deficient in 511P-I gene when bred to mice ablated interferon-y receptor develop a hyper-proliferative disease resulting in splenic hyperplasia. Mice deficient in 511P-I and the CD45 tyrosine phosphatase die within a few weeks of birth from a probable cause of increase leukocyte adhesion and activation. A further characterization of both these sets of mice is proposed. Essential to 511P-I function is the regulation of catalytic activity. As an unbound protein, 511P-I has low catalytic activity. Engagement of the SH2 domains results in a dramatic increase in catalytic efficiency, as much as ten-fold. Experiments proposed in Specific Aim 2 further define the mechanism that regulates enzyme activity. In Specific Aim 3 experiments are proposed to examine the interaction between 511P-I and the ZAP7O/syk protein tyrosine kinase family. We have recently demonstrated that 511P-I serves to negatively regulate ZAP-70. Studies are proposed to further define the interaction. The studies proposed in this application will lay the foundations for development of pharmacological agents to modulate leukocyte activation and proliferation.